The company claims it would be sensible for the various vendors and intellectual property owners in the mobile industry to cap total royalty payments for 3G mobile equipment at 5% of the total cost. Nokia believes this is essential for healthy growth of the mobile industry. "In our opinion, this is the level of royalties that encourage greater growth and innovation in the industry," said senior vice president of Nokia Networks, JT Bergquist.

The last major CDMA technology patent battle in the industry was between leading mobile infrastructure vendor LM Ericsson Telefon AB and Qualcomm Inc. This patent dispute led to the global fracture in third-generation handset standards, leaving W-CDMA adopted in Europe, some of the US, and some of Asia, with CDMA 2000 adopted elsewhere. The dispute was finally settled, too late for a single third-generation mobile standard to emerge, by Ericsson buying Qualcomm's network infrastructure business (NBD 03/26/99). Arguably this battle has significantly delayed the roll-out of third-generation technologies.

Nokia is now attempting to pressure the entire industry to accept a royalty rate that is far lower than would have previously been charged. It claims that W-CDMA is now the de-facto global standard for 3G mobile technology, and if the industry charges more reasonable licensing rates then it will see faster growth and higher demand. The company claims to own more than 25% of "the essential patents registered with the European Telecommunications Standards Institute," and various other standards bodies. This leaves other major intellectual property owners such as Ericsson, Qualcomm and Motorola to decide if they need to join in with Nokia's as-yet unnamed scheme.

However, as Nokia will not publicly confirm which vendors it is particularly targeting with this initiative, and relations in terms of licensing are normally fairly open with Ericsson, and reasonably open with Motorola, this initiative seems to be designed to hit Qualcomm.

Qualcomm, which is now an intellectual property company, needs to charge substantial licensing fees for the technology that it mainly owns itself. If Nokia's strategy goes to plan then it could see some impoverished CDMA operators desert its third-generation technology roadmap, if the W-CDMA camp can make handsets and network equipment substantially cheaper than the CDMA 2000 alternatives.

Nokia has already started trying to reduce the price of key mobile equipment hardware, in a series of announcements that it made at the GSM World Congress in Cannes in February. The company is trying to open up the hardware and software which makes up its equipment, in an effort to reduce the cost of components and speed development.